Gangster Capitalism

An interview with Linda McQuaig, author of All You Can Eat: Greed, Lust and the New Capitalism, on old-style capitalism in new clothes, the triumph of corporate avarice over human rights, and the disturbing centrality of greed in Western society.

Q: In All You Can Eat, you talk about a “new capitalism.” What do you mean by that?

A: I mean the strain of capitalism that has emerged in the last decade or so, which is a purer, more laissez-faire-style capitalism than what we had before. It seeks to free private enterprise from the constraints of government and rely more on the market for solutions – which means things like privatization, deregulation and the removal of social supports and labour protections. It is basically about giving more power to the market, and to the corporate interests who dominate the market.

It’s really an attempt to revive the unfettered capitalism of the nineteenth century, and in that sense may seem more like a return to an “old capitalism.” But what is really new is the attempt to use the new international trade deals such as NAFTA (the North American Free Trade Agreement) to enforce this corporate dominance and install it as the way of the world. That is both new and very ambitious.

Q: Aren’t those trade deals about increasing trade? How do they make corporations more powerful?

A: Well, the trade deals are about a lot more than increasing trade. Trade is what they purport to be all about. And that’s what politicians and business leaders emphasize when they talk about them. But in fact, they go far beyond setting international rules for trade. They create a whole new set of rights for corporations that give them far-reaching powers to challenge democratically-elected governments. This creates a situation where corporate profit-making rights are given precedence over the rights of citizens to protect themselves.

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Q: What do you mean by that? Can you give an example?

A: Sure. Let’s take the case of Metalclad. It’s an American company that wanted to build a landfill site for toxic waste in Mexico, near the town of Guadalcazar. But the people of Guadalcazar feared it would pollute their drinking water, so the town refused to grant the company a building permit for the site. Now, in the days before NAFTA, that would have been the end of the matter. But under NAFTA, Metalclad was able to take its case to a special tribunal. These special tribunals, which meet in secret, are basically set up to enforce the rights of foreign corporations to operate and earn profits in NAFTA countries. In this case, the tribunal decided that Mexico had infringed on Metalclad’s rights when the town of Guadalcazar denied the company a building permit. The tribunal ordered Mexico to pay the company $20 million in damages.

Q: Wouldn’t the companies argue that this sort of system is necessary to protect their rights and their investments from arbitrary actions by governments?

A: Well, it’s a question of competing rights. What about the rights of the local people to have clean drinking water? Essentially, we’ve put the profit-making rights of corporations above the rights of citizens to take collective actions in their own interests. In fact, what we’ve done is elevated corporate profit-making rights above all other kinds of rights.

In international law, there are special protections for things the international community considers important – human rights, environmental rights, social and political rights, etc. All these rights are also enforced by international tribunals or agencies. But the difference is that, in these other areas, the tribunals have no power. Take the case of human rights – something we would all agree is vitally important, but which has minimal protection in international law. In All You Can Eat, I tell the story of a woman in Peru who has been jailed for more than ten years in Lima. The United Nations Human Rights Committee considered her case and ruled that she was being wrongly imprisoned and should be immediately released and compensated for her suffering. Sounds good. But the problem is that the committee, which operates under the authority of the United Nations, has no real power. The committee sent Peruvian authorities a letter, which they ignored. The woman remains in jail. Compare that to the rights corporations enjoy under NAFTA, where corporate “victims” like Metalclad can take their grievances to a tribunal with real power to impose multi-million dollar fines on governments.

So what we have done is create stronger international rights for corporations to be free from constraints on their profit-making than for humans to be free from beatings, torture and imprisonment. This seems to me like a very weird sense of priorities.

Q: You’re also very critical of the World Bank and the IMF. Don’t these institutions lend money to countries in need? Isn’t that a good thing?

A: Well, once again, there’s more to it. The problem is that leading western nations, which control the IMF and the World Bank, use this lending power to force countries around the world to make certain changes – changes that primarily suit the interests of major corporations in the industrialized world. The World Bank and the IMF impose a lengthy set of conditions on countries borrowing money, and these conditions are mostly about forcing these countries to remodel their economies in ways that are favourable to western corporate interests, but not necessarily in the interests of the people in these countries.

For instance, a common IMF/World Bank requirement is that countries privatize their water systems – which generally means removing government subsidies that have enabled local people in poor countries to afford clean water. Under privatization, the cost of clean water becomes unaffordable to large numbers of people. This is beneficial to foreign companies that want to get contracts to handle water purification and delivery systems, but it is devastating to large parts of the population of these countries.

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Q: Overall, though, hasn’t the Third World been making advances in recent years, under globalization?

A: It seems that just the opposite is true. In just about every part of the less developed world, there has been a significant slow-down in economic growth in the last twenty years. Some of the poorest parts of the world, particularly Africa, have actually regressed. This is not to suggest things were good before. But the last two decades – when “globalization” has really got underway – have been particularly bad.

A world income study prepared by an economist within the World Bank shows that more than 70 per cent of the world’s population has experienced an actual decline in their living standards. This is quite contrary to the upbeat picture painted by the enthusiasts of globalization.

Q: But here in Canada we’ve been doing better in the era of globalization, haven’t we?

A: By some measures, yes; by other measures, no. You can point to charts showing that there’s been lots of growth in our GDP. But increasingly people are questioning if this is the most meaningful measure. GDP, or Gross Domestic Product, simply measures the overall level of economic activity in the country. But there’s a lot of things it doesn’t tell us. It doesn’t tell us how the benefits of this growth are distributed – whether, for instance, a relatively small group of affluent people are doing extremely well, while others are not doing well or may be doing badly. It also tells us nothing about the amount of financial security people enjoy – even though to most people, financial security is very important, perhaps as important as their income level.

For this reason, two Canadian economists have devised what they call an Index of Economic Well-Being, which is an attempt to come up with a more meaningful measure of our economic progress as a society. This index paints a less encouraging picture than our ever-rising GDP. It shows increases in inequality and a particularly alarming decline in the financial security experienced by most Canadians. According to this measure then, things haven’t been so rosy in recent years. In fact, overall, we are worse off – in terms of our economic well-being – than we were in 1970.

Q: You talk a lot about the role of greed in our society. But aren’t you being idealistic, expecting anything different? Isn’t that just human nature?

A: Greed and material acquisitivenss are certainly part of human nature. But our society has made greed and material acquisitiveness its central organizing principles. That’s what capitalism, and particularly the “new capitalism” is all about. This seems utterly natural to us, because we’re so used to it. But there’s really nothing natural or inevitable about it.

Through most of human history and in just about every part of the world, greed and material acquisitiveness were not the central activities of society. They were considered less important than other things such as family, religion, clan, community, tradition. As the economic historian Karl Polanyi has shown, it is only in western capitalist societies, in the last few centuries, that greed and the pursuit of material gain have been given almost free rein, have been encouraged, massaged and even considered the very essence of the human personality. Polanyi argued that this wasn’t some natural evolution, based on human nature, but rather was a deliberately imposed redesign of society, carried out by a small but powerful elite in order to enhance its own interests.

I would add that it is only in the last decade or so that we’ve pushed things an amazing step further by providing greed and material acquisitiveness – on the part of corporate interests – with special protections in international law.